Trade-Ideas LLC identified Bank of New York Mellon ( BK) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Bank of New York Mellon as such a stock due to the following factors:

  • BK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $191.7 million.
  • BK has traded 648,211 shares today.
  • BK is trading at 2.47 times the normal volume for the stock at this time of day.
  • BK crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on BK:

The Bank of New York Mellon Corporation, an investment company, provides financial products and services to institutions, corporations, and high net worth individuals in the United States and internationally. It operates through two segments, Investment Management and Investment Services. The stock currently has a dividend yield of 1.7%. BK has a PE ratio of 15. Currently there are 8 analysts that rate Bank of New York Mellon a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Bank of New York Mellon has been 5.3 million shares per day over the past 30 days. Bank of New York Mellon has a market cap of $43.7 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.32 and a short float of 0.7% with 1.60 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bank of New York Mellon as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • BANK OF NEW YORK MELLON CORP has improved earnings per share by 8.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BANK OF NEW YORK MELLON CORP increased its bottom line by earning $2.71 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($3.09 versus $2.71).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 4.9% when compared to the same quarter one year prior, going from $779.00 million to $817.00 million.
  • Net operating cash flow has significantly increased by 2903.12% to $1,794.00 million when compared to the same quarter last year. In addition, BANK OF NEW YORK MELLON CORP has also vastly surpassed the industry average cash flow growth rate of -202.54%.
  • The gross profit margin for BANK OF NEW YORK MELLON CORP is currently very high, coming in at 96.70%. Regardless of BK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BK's net profit margin of 21.23% compares favorably to the industry average.

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